We all hear of the horror stories about start-ups. But these fear mongers are lacking detail and perspective. According to the Office for National Statistics, 96% of all businesses in the UK have fewer than 10 staff. So that’s you.
Of these micro-businesses, since 2011, the survival rate is actually higher than you’d think:
What this means is that if 1000 businesses started in 2011, about 90 of them would be left standing by the end of Year 5. Not as scary as you’d think. However, there’s an important caveat here; these stats are skewed to the positive.
For brand new business owners starting out for the first time, the 10/20/30/40/50 rule of thumb applies.
This means that roughly 10% of virgin start-ups will survive in year 1, then 20% in year 2 etc etc. So if 1000 newbies started out in 2011, 5 years later, only 1 would be still trading!
But why is this?
I’m afraid, it’s down to the new Entrepreneur; or more accurately, Wantrepreneur. Most of the time the failure rate has nothing to do with the actual business idea. It’s the lacklustre implementation and market traction that kills it.
In essence, the new Entrepreneur just doesn’t have enough business knowledge, experience, contacts and resources. Don’t let this get you down though. Even Elon Musk was a Entrepreneur at some point! It’s the rite of passage one must traverse!
This is why we’ve all heard of many examples of the founder of a business being bought out early on and the new big wig propels that business through the roof. Elon Musk didn’t start Tesla…he simply bought it off the founder and then scaled it. The same for Victoria’s Secret and many others.